Governments across the Middle East and North Africa will face a “massive demographic challenge” as a large, rapidly growing young population enters the workforce over the coming decade and beyond, BMI Research has said in a report.
“Failure to invest in labour-intensive infrastructure projects or make necessary reforms to employment law in an effort to create new job opportunities could see economic growth stagnate, and raise the risks of protracted political instability over the long run,” it said.
The Middle East and North Africa (Mena) economic, political and social institutions have numerous “structural weaknesses”, which will make the region unable to handle demographic and labour market trends over the next decade and beyond, the Fitch Group company said.
According to BMI’s own estimates, Mena states need to create anywhere from 40mn to 65mn new jobs over the next decade to absorb this youth cohort and reduce unemployment, a particularly difficult task given the hitherto lack of reform momentum in many states.
“While the ability to absorb these new entrants into the labour market would see these economies benefit from a ‘demographic dividend’ as the influx of new workers enters their most productive years, this will be an extremely difficult task even for the most reform-oriented of governments,” BMI said.
That Mena currently has the highest regional rates of both total and youth unemployment in the world, in addition to the lowest rate of female participation in the workforce, does not bode well.
As it stands, Mena has a combined population of 430mn; BMI said citing the World Bank data. This figure, however, masks a large variation at the sub-regional level, with net oil importers (including Morocco, Tunisia, Egypt, Syria, Jordan and Lebanon) being the sing le largest markets with 171mn people, while non-GCC oil exporters (including Iraq, Iran, Algeria and Libya) hold 164mn.
In contrast, the oil-rich economies in the GCC region (including Qatar, the UAE, Saudi Arabia, Bahrain, Oman and Kuwait) possess a combined population of only 53.8mn, almost half of Egypt alone.
One of the key differences between Mena’s demographic profile and other regions such as Emerging Europe is that the former’s is heavily skewed towards youth.
As a group, 49% and 50% of net oil importers and non-GCC oil exporters’ populations respectively are under the age of 25, while the similar figure for the GCC is 41%.
BMI said these figures mask some considerable differences, with Iraq and Syria being at the upper end of the scale with 60% and 55% of their populations under the age of 25, in contrast to Qatar and the UAE where the figure is only around 30%.
The population growth rates also vary considerably across sub-regions, and are not related to the structure of the economy.
“While the outlook is relatively brighter for oil-rich states in the GCC, which have invested in the non-hydrocarbon sector and possess higher living standards, the same does not hold true across the region. Challenges will be greater for governments which face larger, more youthful and more rapidly expanding populations, and whose economies are still heavily reliant on the hydrocarbon sector (itself not a major job creator),” BMI said.
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
Qatar fiscal strength limits vulnerability from oil price shocks, says Moody’s
Good time for small businesses to go digital: says entrepreneur
Nomura CEO signals more job cuts in Europe to reverse losses
RBC eyes more private-equity dealings in 2019 to gain edge
Europe markets test investor nerves in roller coaster ride
Foxconn to begin assembling top-end Apple iPhones in India in 2019: Source
Japan factory output falls, sales slow as risks to economy rise
Nissan to make fewer cars in China as demand slows
UK finance watchdog makes less from fines after a bumper year